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Accounting: Inventories, Income and Costs

Please see the attached file for the entire problem.

Within the relevant range, as the number of units produced increases:

(a) the variable cost per unit remains the same.
(b) fixed costs in total remain the same.
(c) variable costs increase in total.
(d) all of the above.

Vignana Corporation manufactures and sells hand-painted clay figurines of popular sports heroes. Shown below are some of the costs incurred by Vignana for last year:

What is the total of the inventoriable (product) costs above?

(a) $69,000
(b) $0
(c) $159,000
(d) $155,000

Vignana Corporation manufactures and sells hand-painted clay figurines of popular sports heroes. Shown below are some of the costs incurred by Vignana for last year:

What is the total of the conversion costs above?

(a) $65,000
(b) $90,000
(c) $69,000
(d) $155,000

Streif Inc., a local retailer, has provided the following data for the month of June:

The net operating income for June was:

(a) $79,000
(b) $85,000
(c) $126,000
(d) $132,000

The following data pertain to Graham Company's operations in May:
May 1 May 31
Work in process inventory $6,600 $12,400
Raw materials inventory $14,700 ?
Finished goods inventory ? $21,000

Other data:
Raw materials used $41,700
Sales $207,000
Cost of goods manufactured $136,000
Manufacturing overhead cost $61,000
Raw materials purchases $38,000
Gross Margin $65,000

The beginning finished goods inventory was:

(a) $9,000
(b) $122,000
(c) $48,500
(d) $27,000

Yokum Company has provided the following data for the month of August:
August 1 August 31
Raw materials inventory $8,100 ?
Work in process inventory ? $14,000
Finished goods inventory $26,000 $34,000

Other Data:
Sales $377,000
Manufacturing overhead costs $43,500
Direct labor $71,600
Purchase of raw materials $94,000
Administrative expenses $39,500
Cost of goods manufactured $268,000
Raw materials used in production $88,400
Selling expenses $15,400

The ending raw materials inventory was:

(a) $15,200
(b) $12,500
(c) $14,400
(d) $13,700

Juart Corporation reported the following data for the month of December:
Inventories: Beginning Ending
Raw materials $26,300 $37,200
Work in process $23,000 $22,200
Finished goods $53,500 $59,500

Additional information:
Sales $230,000
Raw materials purchases $73,500
Direct labor cost $24,900
Manufacturing overhead cost $54,500
Selling expense $19,000
Administrative expense $57,200

The net operating income for December was:

(a) $17,000
(b) $27,500
(c) $11,500
(d) $25,500
Management of Thede Corporation has asked your help as an intern in preparing some key reports for July. The beginning balance in the raw materials inventory account was $28,600. During the month, the company made raw materials purchases amounting to $56,500. At the end of the month, the balance in the raw materials inventory account was $36,800. Direct labor cost was $46,000 and manufacturing overhead cost was $60,000. The beginning balance in the work in process account was $22,300 and the ending balance was $22,700. The beginning balance in the finished goods account was $42,900 and the ending balance was $55,700. Sales totaled $231,000. Selling expense was $12,300 and administrative expense was $32,500.

The total manufacturing cost for July was:

(a) $154,300
(b) $166,800
(c) $170,000
(d) $136,800

Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $365,000 or a new model 220 machine costing $328,000 to replace a machine that was purchased 7 years ago for $336,000. The old machine was used to make product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired.

Management has decided to buy the new model 220 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product I43L.

Management also considered, but rejected, the alternative of simply dropping product I43L. If that were done, instead of investing $328,000 in the new machine, the money could be invested in a project that would return a total of $420,000.

In making the decision to buy the model 220 machine rather than the model 370 machine, the differential cost was:

(a) $37,000
(b) $42,000
(c) $35,000
(d) $49,000

Debra works on the assembly line of a manufacturing company where she installs a component part for one of the company's products. She is paid $16 per hour for regular time and time and a half for all work in excess of 42 hours per week.
Debra works 43 hours in a given week but is idle for 7 hours during the week due to equipment breakdowns. The allocation of Debra's wages for the week between direct labor cost and manufacturing overhead cost would be:
Direct Labor Manufacturing Overhead

(a) $696 $0

(b) $576 $120

(c) $672 $24

(d) $688 $8

Conversion cost is the sum of direct labor and manufacturing overhead.

(a) True
(b) False

The Sarbanes-Oxley Act of 2002 contains all of the following provisions EXCEPT:

(a) Both the CEO and CFO must certify in writing that their company's financial statements and accompanying disclosures fairly represent the results of operations.
(b) The audit committee of the board of directors of a company must hire, compensate, and terminate the public accounting firm that audits the company's financial reports.
(c) A company's annual report must contain an internal control report.
(d) Financial statements must be audited once every three years by the Government Accounting Office.

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